The first Dutch expedition round the Cape to the far east, in 1595, is captained by Jan Huyghen van Linschoten, a Netherlands merchant whose only knowledge of the orient comes from trading in Lisbon. The survivors of this journey get back to Holland two years later. They bring valuable cargo. And they have established a trading treaty with the sultan of Bantam, in Java.

Their return prompts great excitement. Soon about ten private vessels are setting off each year from the Netherlands to find their fortune in the east. The States General of the newly independent Dutch republic decide that this unlicensed trading activity, in distant and dangerous waters, needs both control and protection.

In 1602 the States General form a Dutch East India Company, with extensive privileges and powers. It is to have a tax-free monopoly of the eastern trade for twenty-one years. It is authorized to build forts, establish colonies, mint coins, and maintain a navy and army as required.

With these powers the company takes only a few decades to deprive Portugal of the spice trade. A capital is established at Batavia, in Java, in 1619. The Portuguese are driven out of Malacca by 1641 and from Sri Lanka by 1658. But the main focus of Dutch attention is the Moluccas - the Indonesian islands of which the alternative name, the Spice Islands, declares their central importance in the eastern trade.

Dutch in America: 1624-1664

In 1621 the States General in the Netherlands grant a charter to the Dutch West India Company, giving it a monopoly to trade and found colonies along the entire length of the American coast. The area of the Hudson river, explored by Hudson for the Dutch East India Company in 1609, has already been designated New Netherland. Now, in 1624, a party of thirty families is sent out to establish a colony. They make their first permanent settlement at Albany, calling it Fort Orange.

In 1626 Peter Minuit is appointed governor of the small colony. He purchases the island of Manhattan from Indian chiefs, and builds a fort at its lower end. He names the place New Amsterdam.

The Dutch company finds it easier to make money by piracy than by the efforts of colonists (the capture of the Spanish silver fleet off Cuba in 1628 yields vast profits), but the town of New Amsterdam thrives as an exceptionally well placed seaport - even though administered in a harshly authoritarian manner by a succession of Dutch governors.

The only weakness of New Amsterdam is that it is surrounded by English colonies to the north and south of it. This place seems to the English both an anomaly and an extremely desirable possession. Both themes are reflected in the blithe grant by Charles II in 1664 to his brother, the duke of York, of the entire coastline between the Connecticut and Delaware rivers.

New Amsterdam, and behind it New Netherland, lie exactly in the middle of this stretch. When an English fleet arrives in 1664, the Dutch governor Peter Stuyvesant accepts the reality of the situation and surrenders the territory without a shot being fired. New Amsterdam is transformed without upheaval into New York.

This reduces the Dutch presence in the new world to the region of Guiana, in south America, where the first settlements are established before 1616. Taken over by the company from 1621, they survive on sugar grown with slave labour. Frequently disputed between Dutch, French and English interests, the Dutch section of the Guiana coast eventually becomes Surinam.

The prosperous Dutch republic: 17th century

The trading energies of the Dutch in the far east and in the Americas are reflected in the growing prosperity of the towns of the United Provinces. Wealth accumulates in Holland and the other provinces at an extraordinary rate during the 17th century, creating an entirely new form of society and one with great significance for later centuries.

These towns of the northern Netherlands are the first middle-class communities, a foretaste of what is later often described as the bourgeoisie.

In this respect the United Provinces differ profoundly from another republic founded on trade. The institutions of Venice, in origin a medieval power, are aristocratic. The States General of the Netherlands, acquiring its independence in the 17th century, is no less an oligarchy than the Venetian senate. It too is the preserve of a small ruling class.

But the Dutch ruling class is made up of energetic merchants with eminently practical concerns. They are pillars of their community, in Amsterdam and in many lesser towns. And they are Protestants.

These characteristics profoundly affect the style of life emerging in Holland at this time. How much the Protestant ethic of Calvinism is linked with this capitalist society is a matter of debate. But a new departure is evident in many observable details..

These Dutch merchants live in a new kind of house - the comfortable but relatively small town house, several stories high on a narrow plot of valuable real estate. Copied in England in the next century, this pattern provides the neat terraces of Georgian London or Bath. But the Dutch are in the lead. In the 17th century they are by far the most urban Europeans; two thirds of them live in towns.

In their town houses the Dutch live in smaller family groups than is normal elsewhere, starting a trend which leads eventually to the modern nuclear family. And they are so interested in their new society that they commission an entirely original school of painting to celebrate it.

Pictures by artists such as Pieter de Hooch, showing members of the family and domestic servants in meticulously swept Dutch interiors, are unprecedented in the history of art.

The new Dutch prosperity is based almost entirely on overseas trade. In the second half of the 17th century the Dutch merchant fleet equals that of England, France, Spain and Portugal combined. And Dutch wages are the highest in Europe, some 20% above the equivalent in England.

This upstart republic, rejecting the claims of monarchy and acquiring wealth more rapidly than any other state, cannot avoid provoking hostility - above all from England, its immediate neighbour over the water and its greatest rival for new international trade. The years from 1652 to 1674 include no less than three successive Anglo-Dutch wars.

Anglo-Dutch wars: 1652-1674

The first clash at sea between England and the United Provinces comes at a period, in 1652, when both nations are republics - England as the self-proclaimed Commonwealth which has executed its monarch in 1649, and the United Provinces as a republic which has at last achieved full international recognition in 1648.

As Protestant republics the two should be in sympathy. But as maritime nations, competing for trade around the world, and together requiring the Channel and the North Sea for access to their home harbours, they have everything to fight for.

The Dutch have a stronger trading position. Their dominance in the far east has been brutally asserted in 1623, with the massacre of English merchants in Amboina. They have more recently seen off English fleets in the Mediterranean. But geographically they have a major disadvantage in relation to England. To bring home their merchantmen, heavily laden with valuable goods, they have to escort them through waters close to British shores - either through the Channel, or by the northern route round Scotland.

Between 1649 and 1651 the leaders of the Commonwealth double the size of the English fleet. By 1652 they are ready to challenge Dutch merchant fleets passing through the Channel.

The first engagement is an inconclusive encounter between a Dutch fleet commanded by Maarten Tromp and an English squadron under Robert Blake. They are two of the best admirals of the time. A third is Michiel de Ruyter, who fights brilliantly for the Dutch in later stages of the conflict. It is he who carries off the famous triumph (or in British eyes the outrageous affront) of sailing up the Thames and into the Medway in 1667, to destroy much of the English fleet in its home base.

These three admirals all lose their lives in sea battles. Every engagement of these Anglo-Dutch wars is fought at sea - an indication of the new importance, since the Armada, of naval warfare.

The first Anglo-Dutch war ends in 1654 with the treaty of Westminster, by which the Dutch pay an indemnity - long after the event - for the massacre at Amboina. Hostilities resume in 1665, until the treaty of Breda in 1667 formally cedes New Amsterdam to England. The third war lasts from 1672 to 1674, ending with another treaty of Westminster and the symbolic concession that Dutch ships will salute the English flag in the North Sea - as a mark of respect only.

In immediate terms the effect of these wars has been slight. The important underlying change is that the English navy has grown steadily in strength and stature and can now stake a claim - fully justified in the next century - to be the world's leading maritime power.

Calvinism and capitalism: 17th century

The development of capitalism in northern Protestant countries, such as the Netherlands and England, has prompted the theory that the Reformation is a cause of capitalism. But this states the case rather too strongly, particularly since the beginnings of capitalism can be seen far earlier.

Nevertheless there are elements in Reformation thought which greatly help the development of capitalism. This is particularly true of the Calvinist variety of the reformed faith, which becomes the state religion of the Netherlands after the Great Assembly of 1651.

The most immediate way in which the Reformation aids the capitalist is by removing the stigma which the Catholic church has traditionally attached to money-lending - or usury, in the pejorative Biblical term.

Calvinism positively encourages the purposeful investment of money, by presenting luxury and self-indulgence as vices and thrift as a virtue. It even subtly contrives to suggest that wealth may itself be a sign of virtue. This useful slight of hand is contrived with the help of the Calvinist doctrine of predestination. If certain virtuous people are predestined to be saved in the next world, then perhaps success in this one is an advance indication of God's favour.

The tolerant Dutch republic: 17th century

Although Calvinist communities elsewhere incline to intolerance (New England, for example), the Dutch remain true to their republic's founding declaration in the 1579 Union of Utrecht - that "every citizen should remain free in his religion, and no man may be molested or questioned on the subject of divine worship." The freedom which they originally claimed for themselves, these Calvinists extend with admirable consistency to others.

Amsterdam in the 17th century becomes famous as a city of tolerance. Even Catholics, ferocious persecutors of Protestants in the Spanish Netherlands, are allowed to worship in private chapels. One of them, Our Lord in the Attic, survives in Amsterdam today.

The republic benefits greatly from the arrival of enterprising refugees escaping persecution elsewhere - puritans from England (though the Pilgrim Fathers turn out to be only in transit), Huguenots from France, Jews, even philosophers with no great need to escape but with a liking for this atmosphere of liberty.

Descartes lives in Amsterdam for twenty years, until his final and ill-advised journey to Stockholm. In a letter to a friend in Italy he describes the city as the most Congenial place in the world.

Stadholderless: 1653-1672

When the Anglo-Dutch wars begin, in 1652, five of the seven United Provinces have no one in position as stadholder. Part of the reason is that the head of the house of Orange, the traditional holder of the office, is a one-year-old infant, the future William III. But the office itself is also the subject of political debate.

One faction, representing the oligarchy of the leading merchants, maintains that the stadholder is needed only in a time of crisis. With the treaty of Westphalia in 1648 the republic has finally won its independence. The States General, they argue, are well equipped to safeguard Dutch interests in peacetime.

A rival party, representing the army and the house of Orange, maintains that the welfare of the republic will continue to depend on war. A stadholder, they say, is indispensable.

For the moment the oligarchy prevails, but power does not pass to the full States General of all the provinces. Instead it goes to the chief executive (or "pensionary") of the estates of Holland, the most powerful province. In 1653 the 28-year-old Johan de Witt is elected to this office, which he holds - and exercises with distinction - until his death in 1672.

The reason for de Witt's violent death in 1672 is the return to the United Provinces of the horrors of warfare on land. In that year France and England together declare war on the Dutch. Louis XIV leads a magnificently equipped French army on to Dutch soil and rapidly overruns much of the country. Amsterdam is only saved by the classic Dutch manoeuvre of breaching the dykes and flooding the plain.

In the panic there is popular clamour for the return of the house of Orange, saviours of the republic in the past. William III, now twenty-one, is appointed stadholder of Holland and Zeeland and captain-general of all the provinces. An over-excited mob seeks out and murders de Witt.

William III of Orange: from1672

The new stadholder rapidly enlists allies against the French invaders of the United Provinces. In 1672 the Austrian emperor Leopold I joins an alliance, as does the elector of Brandenburg. It is the first of several European-wide alliances in response to the growing power of France under Louis XIV.

On this occasion England is already France's ally against the United Provinces in the existing war which William III inherits. But in 1674 William signs a treaty with England, in the peace of Westminster, leaving France as the only enemy.

During 1673-4 William drives the French out of the United Provinces (now increasingly known to the English as Holland, from the name of the largest province). Other participants against France by now include Spain and Denmark, in addition to Austria and Brandenburg, so the war continues on many fronts until 1678-9 - when France signs a clutch of individual treaties with her various opponents at Nijmegen.

France gains from some of the treaties, but the one signed with Holland restores all the Dutch territories. Meanwhile William is forming a different sort of alliance - building on his existing family links with England.

William's mother is Mary, daughter of Charles I of England. In 1677 he marries his cousin, also Mary, the daughter of the duke of York, younger brother of Charles II. Charles II has no children, so the duke of York is the heir presumptive to the throne. Next in line are the duke's two daughters, Mary and her younger sister Anne.

After them comes their Dutch cousin, William. So, already fourth in succession to the English crown, he is now also the husband of the princess who is second in line.

William's father-in-law, the duke of York, inherits the English crown in 1685 as James II. His brief reign of three years brings a mood of constitutional crisis because he is a convert to Roman Catholicism in an obsessively anti-Catholic country. Nevertheless the future seems secure; James's two daughters have been brought up as Protestants. But in 1688 the king's second wife, herself a Catholic, gives birth to a boy. Suddenly there is the prospect of England being forced back to Catholicism.

Within a month of the birth of the prince a letter reaches William, from a powerful faction in England, urging him to invade and claim his wife's throne. The States General in Holland agree that he should do so.

Holland and England: 1689-1780

William's campaign against James II achieves immediate success, making him by February 1689 William III of England and of Orange (the number within each dynasty is the same). During his reign, to 1702, Holland is inevitably a junior partner, as the smaller of his two realms.

It is a status which is also becoming the case in economic and in naval terms. In the mid-17th century Holland has been the leading economic power in Europe and at least the equal of England at sea. By the end of the century England's navy is stronger and her economy is overtaking Holland's. Both are great maritime powers, but England has the inestimable advantage of being an island.

England is safe if her navy is strong. Holland must protect her merchant fleets at sea but must also maintain a strong army to defend her very vulnerable land frontiers against the aggressive powers of continental Europe. For a relatively small country this is a massive burden. During the 18th century its effects begin to tell.

During the first half of the century Holland remains an ally of England, while the house of Orange keeps family links with the British royal family (William IV marries George II's daughter Anne in 1734). But subsequently the Dutch find the expansion of British power as unwelcome as French aggression in the previous century.

They also discover the economic benefits of neutrality. Holland keeps out of the Seven Years' War (1756-63) to the considerable advantage of the carrying trade of the merchant fleet. And the Dutch reap similar profits from transporting goods between France and America, after France joins in against England in 1778 during the war of American Independence.

This time England hits back, blockading Dutch ports and seizing Dutch colonies. In the peace of Versailles, signed in 1784, Holland has to make concessions in India and in the far east. But these are nothing to the upheavals facing the Dutch republic during the French Revolutionary and Napoleonic wars.